11. Stock-Based Compensation

As of March 31, 2019, the Company had 251,435 options to purchase common stock and 271 RSUs outstanding.

At the Company’s Annual Meeting of Shareholders held on June 10, 2013, the Company’s shareholders voted to approve the Rexahn Pharmaceuticals, Inc. 2013 Stock Option Plan (the “2013 Plan”).  Under the 2013 Plan, the Company grants equity awards to key employees, directors and consultants of the Company. At the Company’s Annual Meeting held on June 9, 2016, the Company’s shareholders voted to approve an amendment and restatement of the 2013 Plan, including to provide for awards of restricted stock and restricted stock units.  The Company initially reserved 141,666 shares of common stock for issuance pursuant to the 2013 Plan, and on April 11, 2017, the Company’s shareholders approved an increase of 141,667 shares of common stock reserved for issuance pursuant to the 2013 Plan. As of March 31, 2019, there were 229,452 options and 271 RSUs outstanding under the 2013 Plan, and 51,579 shares were available for issuance.    

On August 5, 2003, the Company established a stock option plan (the “2003 Plan”).  Under the 2003 Plan, the Company granted stock options to key employees, directors and consultants of the Company.  With the adoption of the 2013 Plan, no new stock options may be issued under the 2003 Plan, but previously issued options under the 2003 Plan remain outstanding until their expiration.  As of March 31, 2019, there were 21,983 options outstanding under the 2003 Plan. 

Accounting for Awards

Stock-based compensation expense is the estimated fair value of options and RSUs granted amortized on a straight-line basis over the requisite vesting service period for the entire portion of the award. Total stock-based compensation recognized by the Company for the three months ended March 31, 2019 and 2018 is as follows:





No income tax benefit has been recognized in the statement of operations for stock-based compensation arrangements as the Company has provided for a 100% valuation allowance on its deferred tax assets.

Summary of Stock Option Transactions

There were 31,243 stock options granted at exercise prices ranging from $6.36 to $7.45 with an aggregate fair value of $149,436 during the three months ended March  31, 2019.    

The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model.  The Company took into consideration guidance under ASC 718, “Compensation-Stock Compensation,” and Staff Accounting Bulletin No. 107 (“SAB 107”) when reviewing and updating assumptions.  The expected volatility is based upon historical volatility of the Company’s stock.  The expected term is based upon the simplified method as allowed under SAB 107.



The assumptions made in calculating the fair values of options are as follows:



A summary of stock option activity for the three months ended March 31, 2019 is as follows:





There were no stock options exercised during the three months ended March 31, 2019 and 2018. The weighted average fair value of the options granted was $4.78 and $16.20 for the three months ended March 31, 2019 and 2018, respectively.

A summary of the Company’s unvested options as of March 31, 2019 and changes during the three months ended March 31, 2019 is presented below:



As of March 31, 2019, there was $964,646 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average vesting period of 2.8 years.

Summary of Restricted Stock Unit Transactions

The fair value of an RSU award is the closing price of the Company’s common stock on the date of grant.

A summary of RSU activity for the three months ended March 31, 2019 is as follows:



As of March 31, 2019, there was $5,616 of total unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average vesting period of 1.9 years.